Can pay raises placate Egyptians amid fuel, electricity price hikes?

The Egyptian government on June 5 announced pay boosts for civil servants and pension increases ahead of price hikes on electricity and gas. The move, part of the government's social protection program, aims to help Egyptians endure the government’s economic reforms and at the same time stimulate economic growth and reduce the budget deficit.

The parliament agreed to raise pensions by 15% and to give government workers salary increases of 65 Egyptian pounds ($3.60) and 165 Egyptian pounds. Typically, civil servants receive a salary increase every seven months, but the government opted to give them an added increase in light of the current, difficult financial situation.

The government on June 12 then announced a 26% increase in the cost of electricity as of the new fiscal year, beginning July 1. Days later, on June 16, the government announced a hike in fuel prices by varying percentages of up to 50% as part of the economic reform program tied to the approval of a $12 billion loan from the International Monetary Fund.

Sherif Ismail, who had not yet left his post as prime minister when the pay and pension boosts were announced, said the increases would cost the country’s general budget 60 billion Egyptian pounds in the coming fiscal year. He added that about 6.5 million civil servants and 9 million pensioners would benefit from the increases.